The NIRCU and the Phillips curve: an approach based on micro data

Eva M. Köberl and Sarah Lein

Canadian Journal of Economics/Revue canadienne d'économique, 2011, vol. 44, issue 2, 673-694

Abstract: Abstract In this paper we propose a straightforward method to derive a non‐inflationary rate of capacity utilization (NIRCU) based on micro data. We condition the current capacity utilization of firms on their current and planned price adjustments. The non‐inflationary capacity utilization rate is then defined as the rate where a firm feels no price adjustment pressure. One of the main advantages is that this methodology uses structural aspects and does not make it necessary to operate with – often rather arbitrary – statistical filters. We show that our aggregate NIRCU performs remarkably well as an indicator of inflationary pressure in a Phillips curve estimation. Dans ce mémoire, on propose une méthode simple pour dériver le taux non‐inflationniste d'utilisation de la capacité (NIRCU) à partir de micro‐données. On établit l'utilization de la capacité des firmes sur la base des ajustements (présents ou anticipés) de prix. Le taux non‐inflationniste d'utilisation de la capacité est alors défini comme celui où la firme ne ressent aucune pression pour ajuster ses prix. L'un des principaux avantages de cette approche est que cette méthodologie utilise les aspects structurels et ne nécessite pas qu'on utilise des filtres statistiques souvent arbitraires. On montre que le NIRCU agrégé performe relativement bien en tant qu'indicateur de la pression inflationniste dans la calibration de la courbe de Phillips.

Date: 2011
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https://doi.org/10.1111/j.1540-5982.2011.01649.x

Related works:
Journal Article: The NIRCU and the Phillips curve: an approach based on micro data (2011)
Working Paper: The ICU and the Phillips Curve - An Approach Based on Micro Data (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:44:y:2011:i:2:p:673-694

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